Foreign Trade Zones Cajas, Inc, is considering opening a new warehouse to serve the Southwest region, Aaron Garcia, controller for Cajes, has been reading about the advantages of FTZs. He wonders if locating in one would be of benefit to his company, which imports about 90 percent of its merchandise. Garcia estimates that the new warehouse will store imported merchandise costing about $3,450,000 per year Inventory shrinkage at the warehouse (due to breakage and mishandling) is about 4 percent of the total. The average tariff rate on these imports is 20 percent. Required: 1. If Cajas locates the warehouse in an FTZ, how much will be saved in tariffs? 2. Suppose that on average, the merchandise stays in a Cajas warehouse for seven months before shipment to retailers. Carrying cost for Cajas is 12 percent per year. If Cajas locates the warehouse in an FTZ, how much will be saved in carrying costs? What will the total tanf-related savings be?

Foreign Trade Zones Cajas, Inc, is considering opening a new warehouse to serve the Southwest region, Aaron Garcia, controller for Cajes, has been reading about the advantages of FTZs. He wonders if locating in one would be of benefit to his company, which imports about 90 percent of its merchandise. Garcia estimates that the new warehouse will store imported merchandise costing about $3,450,000 per year Inventory shrinkage at the warehouse (due to breakage and mishandling) is about 4 percent of the total. The average tariff rate on these imports is 20 percent. Required: 1. If Cajas locates the warehouse in an FTZ, how much will be saved in tariffs? 2. Suppose that on average, the merchandise stays in a Cajas warehouse for seven months before shipment to retailers. Carrying cost for Cajas is 12 percent per year. If Cajas locates the warehouse in an FTZ, how much will be saved in carrying costs? What will the total tanf-related savings be?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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